With AllOfMP3 gone and MP3sparks reeling, RIAA drops lawsuit

The RIAA has dropped its US federal lawsuit against the parent company of …

The RIAA has dropped its federal lawsuit against MediaServices, LLC, the parent company of AllOfMP3.com. In a court filing last week, the recording industry dismissed the case without prejudice (meaning that it can be filed again) but provided no information on why it was abandoning the effort now. But in comments to Ars Technica today, an RIAA spokesman indicated that the group had won, that MediaServices was out of business, and that MP3sparks was badly crippled.

The lawsuit

AllOfMP3 was sued last year in a New York court as the RIAA claimed that the Russian business "amounts to nothing more than a massive infringement of Plaintiffs' exclusive rights under the Copyright Act and New York law." The complaint also noted that "not surprisingly, that business model has proven to be a roaring success."

No more music

AllOfMP3 has long contended that it pays royalties to Russian music licensing society ROMS and that no US artist or record label has ever approached the society about collecting the money. RIAA companies are reticent to do this because it would look like they were legitimizing the activities of ROMS and AllOfMP3. AllOfMP3 has also argued that, although international music labels may not like it, Russian law permits compulsory licensing of musical works; that is, the copyright holder must be paid, but it cannot stop an agency like ROMS from licensing its works.

The decision to pull the plug on the case now was largely a function of the court's briefing schedule, the RIAA tells Ars. Over the course of the litigation, it came out that MediaServices had liquidated itself and no longer exists as a legal entity, rendering the suit rather pointless. While some blogosphere coverage has lampooned the RIAA for dropping the case and declaring victory even as the AllOfMP3 site simply shifted domains to MP3sparks.com, the RIAA tells us that the newer site has "been on our radar screen" for some time.

What good is a site if you can't pay?

But the RIAA isn't particularly worried about either MP3sparks or even AllOfMP3, whose owners have been promising a return since last year. That's because AllOfMP3 had most of its credit card access cut off last year under pressure from IFPI, the worldwide music trade group based in London. The RIAA tells Ars that the credit card cutoff has actually been extended to MP3sparks as well, making it extremely difficult for non-Russian users to buy from the site. (To see just how difficult, take a look at the complicated solutions to the problem discussed on various forums.)

Last year, a former MediaServices exec named Denis Kvasov was charged with copyright infringement in Russia but emerged with a "not guilty" verdict in August (one that was later upheld by an appeals court). As we noted at the time, though, Kvasov had stepped down from the company in 2005 before a 2006 copyright law update in Russia gave copyright holders a "making available" right, and his prosecution was based on the older law. Kvasov's acquittal does not imply anything about AllofMP3's or MP3sparks' legal status since 2006. The RIAA points out to us that a new case is currently underway against the next MediaServices boss after Kvasov, one that is based on the updated laws.

In addition, a law that went into effect on January 1, 2008, clarified more issues surrounding Russia's disputed collecting societies (such as ROMS) that are not recognized by the rest of the world. The new law "eliminates any question" of legality, says the RIAA, and we should see soon enough if their confidence is borne out by the Russian legal system.

Whatever one thinks of music industry tactics, it's hard to argue that music is doing nothing but playing Whac-A-Mole with Russian music sites; it has, in fact, had real successes. The US music lobby has managed to make this a trade issue that threatened Russia's bid to join the World Trade Organization. It has managed to change Russian laws. It has managed to get credit card access to the big sites cut off, and it is continuing to push for prosecutions inside Russia.

That's not a bad track record, and it shows just how much firepower the big content owners can bring to bear whenever they identify a central point of control. (When they have to go after decentralized P2P file-swappers, though, the results have been far less impressive, both from a practical and public relations standpoint.)

On its blog, AllOfMP3 yesterday said that it "welcomes the decision of record labels to voluntarily dismiss their $1.65 trillion lawsuit against the site," but until AllofMP3 is back online and taking credit cards, it's hard to see how this could be much of a victory for the site.